Money Market Pioneer Cleared of Fraud

Bruce Bent and his son, the team behind the money market fund that nearly took down the economy, can breathe a sigh of relief. A federal jury rejected charges by the Securities and Exchange Commission that they defrauded investors when their fund, the Reserve Primary Fund, collapsed in September 2008. Nathaniel Popper and Jessica Silver-Greenberg report in The New York Times: “The S.E.C. did convince the jury that the younger Mr. Bent's statements were negligent, and that the parent company had made fraudulent statements. But the decision clearing the Bents of fraud accusations underscored the difficulty prosecutors and regulators have had in holding financiers accountable for precipitating the financial crisis.”

Regulators with the Financial Stability Oversight Council are set to meet on Tuesday to discuss possible ways to overhaul rules for the money market industry.

 

GOLDMAN'S NEWEST PARTNERS  |  This is the day that the most ambitious executives at Goldman Sachs have been waiting for, as the firm is expected to announce its new class of partners. The chosen few will join an elite, and shrinking, group. Only about 70 executives are expected to be promoted to partner this week, the smallest number in more than a decade, according to The Wall Street Journal. Two years ago, 110 partners were named.

The smaller number reflects the broader retrenching on Wall Street. There will be roughly 450 partners once the new class is named, compared with a peak of 480 in early 2011, The Wall Street Journal reports. Even those who make it this year won't receive the kind of rewards that once were the norm. “Changes to the compensation structure have made the partner paycheck less lucrative, because more of their rewards are tied up in Goldman shares that have years-long restrictions on selling ,” according to Reuters.

Many Wall Street firms are looking to lower their employees' expectations. According to the Options Group, a company that advises banks on pay, nearly 20 percent of employees won't get year-end bonuses, Bloomberg News reports. Some banks have announced deep job cuts, and UBS plans to drastically reduce its trading business. “We don't have the good will from our shareholders to continue throwing money away into something that doesn't cover its cost of capital,” Sergio Ermotti, UBS's chief executive, told The Wall Street Journal.

 

INSIDER TRADING CASE GOES TO TRIAL  |  Anthony Chiasson and Todd Newman, two hedge fund traders who eschewed a flashy lifestyle, are in the spotlight for what federal prosecutors say is criminal behavior. Mr. Chiasson, a co-founder of Level Global Investors, and Mr. Newman, formerly of Diamondback Capital Management , are set to stand trial on Tuesday, accused of taking part in a conspiracy that made about $68 million illegally trading stocks, DealBook's Peter Lattman writes. The case will be closely watched for insight into the strategies of SAC Capital Advisors, the giant hedge fund that spawned the firms where the defendants once worked. Mr. Lattman writes that some of the other six traders accused in the case “are expected to testify against Mr. Chiasson and Mr. Newman.”

 

ON THE AGENDA  |  In London, a group of chief executives - Stephen Hester of the Royal Bank of Scotland, António Horta-Osório of Lloyds Bank and Peter Sands of Standard Chartered - are set to testify on banking standards before a parliamentary commission at 11:30 a.m. Eastern Time. Best Buy, which is being eyed by its founder for a possible buyout offer, holds its investor day at the Best Buy Theater in Manhatt an. A conference hosted by Bank of America Merrill Lynch kicks off at the Plaza Hotel in New York. Brian T. Moynihan, Bank of America's chief executive, is scheduled to make opening remarks at 8 a.m., with live audio available online. Lloyd C. Blankfein, Goldman's chief executive, is to speak at 8:50 a.m., also with a webcast. Home Depot reports earnings before the market opens, and Cisco Systems announces results on Tuesday evening. Dinakar Singh, founding partner of TPG-Axon Capital, is on Bloomberg TV at 11 a.m. Elon Musk, the chief executive of Tesla Motors, is on CNBC at 11:30 a.m. Duncan L. Niederauer of NYSE Euronext is on CNBC at 4:30 p.m.

 

REALITY CHECK FOR J.C. PENNEY  |  Ronald B. Johnson, J.C. Penney's chief executive, who once ran Apple's retail business, likes to draw comparisons to Apple when discussing his plans to turn around the retailer. But the two compani es have little in common, Andrew Ross Sorkin writes in the DealBook column. “The lessons, and successes, of the rollout of Apple stores are proving that they do not apply to Penney,” Mr. Sorkin writes. “While the customer experience at Apple is in a class by itself, and Mr. Johnson should rightly receive credit for that, the success of the stores was in large part a function of stunning products with a fan base that would stand outside stores for days in the rain to get their hands on them without any chance of a discount. Do you think there are customers who will ever stand outside J.C. Penney overnight for the next Liz Claiborne sweater?”

 

 

 

Mergers & Acquisitions '

A.I.G. Looks to Shed Its Bank  |  But the insurer still plans to buy mortgages, said its chie f executive, Robert H. Benmosche. REUTERS

 

Sherwin-Williams to Acquire Mexican Paint Maker for $2.4 Billion  |  Sherwin-Williams has agreed to acquire the privately held Consorcio Comex, Mexico's leading paint producer, for $2.4 billion, including debt. DealBook '

 

2 Subsidiaries of Hitachi Said to Be Merging  | 
REUTERS

 

INVESTMENT BANKING '

The ‘DeMarco Trade'  |  Now that President Obama has been re-elected, it seems likely that Edward DeMarco, acting director of the Federal Housing Finance Agency, will be replaced. So, according to The Financial Times, investors are marking down the prices of certain mortgage securities, betting on a new policy that would allow borrowers to refinance. FINANCIAL TIMES

 

Fresh Trading Glitch Hits the N.Y.S.E.  |  The Wall Street Journal reports: “A trading glitch at NYSE Euronext led to a daylong disruption and forced the Big Board operator to establish closing prices for more than 200 stocks using a backup methodology.” WALL STREET JOURNAL

 

Why the Jefferies Deal Could Worry Wall Street's Giants  |  Leucadia is paying 1.2 times tangible book value for the Jefferies Group. Investors are not nearly as sanguine about Goldman Sachs or Morgan Stanley. DealBook '

 

With Jefferies Deal, ‘Baby Berkshire' Deviates From Buffett  |  Ian Cumming and Joseph Steinberg of Leucadia National prided themselves on being disciples of Warren E. Buffett, but on Monday the two did something Mr. Buffett has never done: buy an investment bank outright. DealBook '

 

UBS Said to Get License to Operate in Brazil  | 
BLOOMBERG NEWS

 

PRIVATE EQUITY '

Blackstone Enters $1.2 Billion Energy Partnership  |  The Blackstone Group has announced a partnership with the oil producer LLOG Exploration to invest a combined $1.2 billion in offshore assets in the Gulf of Mexic o. DealBook '

 

Advent International Raises $10.8 Billion Fund  |  The buyout fund is the largest of its kind “to be launched since the financial crisis, according to data-provider Preqin,” The Wall Street Journal says. WALL STREET JOURNAL

 

Rubenstein Expects Buyout Returns to Decline  |  “We do think that private-equity returns probably will come down compared to the historic highs we had 10 years ago,” the Carlyle Group co-founder David M. Rubenstein said on Bloomberg TV. BLOOMBERG NEWS

 

HEDGE FUNDS '

Weintraub Capital to Return Money to Outside Investors  |  The $1 billion hedge fund started by Jerry Weintraub is to become a family office managing Mr. Weintraub's wealth, Bloomberg News reports. BLOOMBERG NEWS

 

Asian Hedge Funds Contend With Cautious Investors  |  Even funds that do well are finding it difficult to raise money from investors, Reuters reports. REUTERS

 

Investors Put More Money in Hedge Funds Last Month  |  October was a month of inflows for the hedge fund industry, according to the SS&C GlobeOp Capital Movement Index, Reuters reports. REUTERS

 

I.P.O./OFFERINGS '

Twitter and Square Con template a Public Future  |  Jack Dorsey, the entrepreneur behind Twitter and Square, said on CNBC that he considered an I.P.O. to be a “milestone,” adding, “We are just getting into the discipline so that we can make the choice when we feel the company and the market is ready for that milestone.” CNBC

 

Facebook's Fakery Problem  |  For Facebook, fake user identities are an “especially acute problem, because it calls into question its basic premise. Facebook has sought to distinguish itself as a place for real identity on the Web,” The New York Times writes. NEW YORK TIMES

 

VENTURE CAPITAL '

Microsoft's Head of Windows Departs  |  Microsoft announced on Monday that Steven Sinofsky, the president of the Windows division, who was considered a possible successor to the chief executive, would leave immediately. NEW YORK TIMES BITS

 

Techies Learning How to Be Human  |  One popular class at Stanford, which teaches students “how to act like normal human beings,” has been “churning out successful tech founders and venture capitalists for more than 30 years,” New York magazine writes. NEW YORK

 

LEGAL/REGULATORY '

S.E.C. Said to Be Investigating Money Manager's Trading Practices  |  The Securities and Exchange Commission is investigating Peter J. Eichler Jr., a Los Angeles money mana ger, as his firm, Aletheia Research and Management, filed for bankruptcy protection on Sunday. DealBook '

 

HSBC's Multiplying Legal Issues  |  The latest inquiry of HSBC, one involving accounts in the island tax haven Jersey, raises questions about whether the bank can settle all the investigations it faces at a reasonable price, Peter J. Henning writes in the White Collar Watch column. DealBook '

 

House Financial Services Report on MF Global Is Due Thursday  | 
REUTERS

 

European Ministers Give Greece More Time for Cuts  |  But the ministers delayed until Nov. 20 a decision to give the country its next installment of aid, The New York Times reports. NEW YORK TIMES

 

Lawyer for Former UBS Trader Likens His Client to Spartacus  |  In his closing remarks to the jury, Charles Sherrard, the lawyer representing Kweku M. Adoboli, a former UBS trader standing trial on fraud allegations, said his client was like Spartacus because he stepped forward to take the blame for his team. DealBook '

 

Reform and the Internet, With Chinese Characteristics  |  China's 18th Communist Party congress has two more days to run but preliminary reports predict there will be no significant changes coming out of the meeting: Bill Bishop discusses what DealBook readers need to know about China this week. DealBook '